Exhibit 99.1
| | | | |
| 800 Cabin Hill Drive, Greensburg, PA 15601-1650 | | |
| | |
| Media contact: | | | | Investor contact: |
| David Neurohr | | | | Max Kuniansky |
| Director, External Communications | | | | Executive Director, Investor Relations
and Corporate Communications |
| Phone: (724) 838-6020 | | | |
| Media Hotline: 1-888-233-3583 | | | | Phone: (724) 838-6895 |
| E-mail:dneuroh@alleghenyenergy.com | | | | E-mail:mkunian@alleghenyenergy.com |
FOR IMMEDIATE RELEASE
Allegheny Energy Reports Second Quarter 2010 Financial Results
GREENSBURG, Pa., August 4, 2010 –Allegheny Energy, Inc.(NYSE: AYE) today reported financial results for the second quarter of 2010.
Consolidated Net Income Attributable to Allegheny Energy, Inc.
| | | | | | | | | | | | |
| | | $ millions | | Per share |
| Three Months Ended June 30 | | 2010 | | 2009 | | 2010 | | 2009 |
GAAP | | $ | 120.2 | | $ | 72.6 | | $ | 0.71 | | $ | 0.43 |
Adjusted | | | 96.9 | | | 69.8 | | | 0.57 | | | 0.41 |
| | | | |
| Six Months Ended June 30 | | | | | | | | |
GAAP | | $ | 208.4 | | $ | 206.5 | | $ | 1.23 | | $ | 1.22 |
Adjusted | | | 199.8 | | | 183.9 | | | 1.17 | | | 1.08 |
Adjusted net income for the second quarter of 2010 excludes a $45.1 million pre-tax gain from the sale of the company’s Virginia distribution operations, $4.3 million of pre-tax expenses related to the proposed merger with FirstEnergy Corp., and unrealized pre-tax losses of $3.4 million from economic hedges that do not qualify for hedge accounting. Adjusted net income for the second quarter of 2009 excludes a net unrealized pre-tax gain of $4.6 million from economic hedges.
Adjusted net income is a non-GAAP financial measure. For information on the calculation of adjusted net income for all periods, see the attached reconciliations of non-GAAP financial measures.
“Earnings increased substantially in the quarter, with the improvement largely due to timing of planned outages at our power plants. Higher generation output and power prices, as well as transmission expansion, also benefited results,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “We’re encouraged by rebounding industrial sales in our regulated operations, a trend that began in the first quarter.”
1
Second Quarter Consolidated Results
Adjusted net income for the second quarter of 2010 increased by $27.1 million compared with the same period in 2009. Key factors contributing to the results include:
| | • | | Adjusted operating revenues increased by $139.0 million compared to the second quarter of 2009, reflecting increased generation output, higher power prices, increased transmission expansion and capacity revenues, and higher rates for fuel and purchased power cost recovery in West Virginia, partially offset by the effect of power hedges. |
| | • | | Fuel expense increased by $78.9 million, primarily due to increased generation output and higher coal prices. |
| | • | | Purchased power costs increased by $14.1 million, primarily due to purchases from a PURPA generation project. |
| | • | | Deferred energy cost income decreased by $9.9 million, largely due to the timing of fuel and purchased power cost recovery. |
| | • | | Adjusted operations and maintenance expense decreased by $46.2 million, reflecting a $36.7 million decrease in special maintenance expense due to the timing of planned outages at power stations, and regulatory approval to recover $8.9 million of storm costs in West Virginia. |
| | • | | Depreciation increased by $13.4 million, primarily due to placing scrubber equipment into service at the Hatfield’s Ferry and Fort Martin power plants in the second half of 2009. |
| | • | | Interest expense increased by $20.5 million, reflecting a decrease in capitalized interest due to placing scrubber equipment in service, increased debt levels to finance transmission expansion, and higher borrowing rates. |
| | • | | Adjusted income tax expense increased by $12.6 million, reflecting higher pre-tax income, partially offset by a lower tax rate. |
Adjusted EBITDA for the second quarter of 2010 was $316.8 million, an increase of $73.6 million compared to the same quarter of the prior year. EBITDA and adjusted EBITDA are non-GAAP financial measures. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.
2
Second Quarter Segment Results
Net Income Attributable to Allegheny Energy, Inc.
Three Months Ended June 30
($ millions)
| | | | | | | | | |
| | | 2010 | | 2009 | | Increase |
Merchant Generation: | | | | | | | | | |
GAAP | | $ | 53.0 | | $ | 41.9 | | $ | 11.1 |
Adjusted | | | 56.9 | | | 39.1 | | | 17.8 |
| | | |
Regulated Operations: | | | | | | | | | |
GAAP | | $ | 67.0 | | $ | 30.5 | | $ | 36.5 |
Adjusted | | | 39.8 | | | 30.5 | | | 9.3 |
Adjusted net income for the Merchant Generation segment in 2010 and 2009 excludes net unrealized gains and losses from economic hedges that do not qualify for hedge accounting. Adjusted net income for both segments for 2010 excludes merger costs. Adjusted net income for the Regulated Operations segment in 2010 excludes a gain from the sale of the company’s Virginia distribution operations. There were no adjustments in the Regulated Operations segment in 2009.
Merchant Generation:Adjusted net income increased by $17.8 million compared to the same period a year earlier. Contributing to the improved results were increased generation output, higher power prices and capacity revenues, and significantly lower operations and maintenance expense. The increased output and lower expense reflect the timing of planned outages at power stations. These positive factors were partially offset by higher fuel costs, the effect of power hedges, and increased depreciation and interest expense.
Regulated Operations:Adjusted net income increased by $9.3 million compared to the same period a year earlier. Contributing to the improved results were higher revenues from transmission expansion, lower operations and maintenance expense reflecting the timing of storm cost recovery in West Virginia, and favorable weather. These positive factors were partially offset by a decrease in recurring operating income as a result of the sale of the Virginia distribution operations on June 1, 2010.
3
Six-Month Consolidated Results
Adjusted net income for the six months ended June 30, 2010 increased by $15.9 million compared to the same period in 2009. Adjusted EBITDA for the six months ended June 30, 2010 increased by $70.2 million compared to the same period of the prior year. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.
Six-Month Segment Results
Net Income (Loss) Attributable to Allegheny Energy, Inc.
Six Months Ended June 30
($ millions)
| | | | | | | | | | |
| | | 2010 | | 2009 | | Increase
(Decrease) | |
Merchant Generation: | | | | | | | | | | |
GAAP | | $ | 95.4 | | $ | 121.8 | | $ | (26.4 | ) |
Adjusted | | | 107.8 | | | 99.2 | | | 8.6 | |
| | | |
Regulated Operations: | | | | | | | | | | |
GAAP | | $ | 112.6 | | $ | 84.3 | | $ | 28.3 | |
Adjusted | | | 91.7 | | | 84.3 | | | 7.4 | |
Adjusted net income for the Merchant Generation segment for the first six months of 2010 and 2009 excludes net unrealized gains and losses from economic hedges that do not qualify for hedge accounting. Adjusted net income for both segments for 2010 excludes merger costs. Adjusted net income for the Regulated Operations segment in 2010 excludes a gain from the sale of the company’s Virginia distribution operations. There were no adjustments in the Regulated Operations segment in 2009.
Reconciliation of Non-GAAP Financial Measures
This news release includes presentation of adjusted net income, EBITDA, adjusted EBITDA and other non-GAAP financial measures as defined in the Securities and Exchange Commission’s Regulation G.
Management believes that presenting these additional financial measures provide investors with a more complete understanding of the core results and underlying trends from which to consider past performance and prospects for the future. These financial measures should not be considered in isolation or viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of operating performance or liquidity.
Pursuant to the requirements of Regulation G, tables are attached that reconcile non-GAAP financial measures in this document to the most directly comparable GAAP measure.
4
Investor Conference Call
Allegheny Energy will discuss these results in a live Internet broadcast at 1:00 p.m. Eastern Daylight Time on Wednesday, August 4, 2010. To listen, visitwww.alleghenyenergy.com. Slides to be used in the Webcast presentation will be available atwww.alleghenyenergy.com several hours prior to the broadcast. A taped replay will be available after the live broadcast.
Allegheny Energy
Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.5 million customers in Pennsylvania, West Virginia and Maryland. For more information, visit our Web site atwww.alleghenyenergy.com.
Forward-Looking Statements
In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: rate regulation and the status of retail generation service supply competition in states served by Allegheny Energy’s distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of litigation; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; capacity purchase commitments; and regulatory matters. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: plant performance and unplanned outages; changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets and actions of rating agencies; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy’s competitors; changes in the weather and other natural phenomena; changes in customer switching behavior and their resulting effects on existing and future load requirements; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints or availability; inflationary and interest rate trends changes in market rules, including changes to PJM participant rules and tariffs; the likelihood and timing of the completion of the proposed merger with FirstEnergy, the terms and conditions of any required regulatory approvals of the proposed merger, the impact of the proposed merger on Allegheny’s employees and the potential diversion of management’s time and attention from ongoing business during this time period; general economic conditions; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies and accounting issues facing our organization; and other risks, including the continuing effects of global instability, terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy’s reports filed with the Securities and Exchange Commission.
###-
5
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
(In millions, except per share amounts) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
Operating revenues | | $ | 945.7 | | | $ | 814.7 | | | $ | 1,994.5 | | | $ | 1,771.9 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Fuel | | | 295.7 | | | | 216.8 | | | | 613.7 | | | | 475.7 | |
Purchased power and transmission | | | 126.3 | | | | 112.2 | | | | 275.2 | | | | 246.1 | |
Deferred energy costs, net | | | 2.3 | | | | (7.6 | ) | | | 10.4 | | | | (24.6 | ) |
Gain on sale of Virginia distribution business | | | (45.1 | ) | | | — | | | | (45.1 | ) | | | — | |
Operations and maintenance | | | 158.6 | | | | 200.5 | | | | 377.1 | | | | 367.8 | |
Depreciation and amortization | | | 80.6 | | | | 67.2 | | | | 160.4 | | | | 135.7 | |
Taxes other than income taxes | | | 56.6 | | | | 46.5 | | | | 113.7 | | | | 102.3 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 675.0 | | | | 635.6 | | | | 1,505.4 | | | | 1,303.0 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 270.7 | | | | 179.1 | | | | 489.1 | | | | 468.9 | |
Other income (expense), net | | | 2.9 | | | | 1.8 | | | | 5.3 | | | | 4.2 | |
Interest expense | | | 79.6 | | | | 59.1 | | | | 156.4 | | | | 116.3 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 194.0 | | | | 121.8 | | | | 338.0 | | | | 356.8 | |
Income tax expense | | | 73.8 | | | | 48.9 | | | | 129.6 | | | | 149.8 | |
| | | | | | | | | | | | | | | | |
Net income | | | 120.2 | | | | 72.9 | | | | 208.4 | | | | 207.0 | |
Net income attributable to noncontrolling interest | | | — | | | | (0.3 | ) | | | — | | | | (0.5 | ) |
| | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. | | $ | 120.2 | | | $ | 72.6 | | | $ | 208.4 | | | $ | 206.5 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings per common share attributable to Allegheny Energy, Inc.: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.71 | | | $ | 0.43 | | | $ | 1.23 | | | $ | 1.22 | |
Diluted | | $ | 0.71 | | | $ | 0.43 | | | $ | 1.23 | | | $ | 1.22 | |
| | | | |
Average common shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 169.7 | | | | 169.5 | | | | 169.7 | | | | 169.5 | |
Diluted | | | 170.1 | | | | 169.9 | | | | 170.1 | | | | 169.9 | |
| | | | |
Dividends per common share | | $ | 0.15 | | | $ | 0.15 | | | $ | 0.30 | | | $ | 0.30 | |
6
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
| | | | | | | | |
(In millions) | | June 30,
2010 | | | December 31,
2009 | |
ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 477.6 | | | $ | 286.6 | |
Accounts receivable: | | | | | | | | |
Customer | | | 237.7 | | | | 188.2 | |
Unbilled utility revenue | | | 97.9 | | | | 116.4 | |
Wholesale and other | | | 87.5 | | | | 64.4 | |
Allowance for uncollectible accounts | | | (14.7 | ) | | | (14.0 | ) |
Materials and supplies | | | 111.8 | | | | 110.6 | |
Fuel | | | 165.1 | | | | 206.4 | |
Deferred income taxes | | | — | | | | 81.5 | |
Prepaid taxes | | | 58.2 | | | | 48.4 | |
Collateral deposits | | | 22.1 | | | | 20.8 | |
Derivative assets | | | 12.6 | | | | 4.6 | |
Restricted funds | | | 24.9 | | | | 25.9 | |
Regulatory assets | | | 128.6 | | | | 132.7 | |
Assets held for sale | | | — | | | | 32.4 | |
Other | | | 38.2 | | | | 40.4 | |
| | | | | | | | |
Total current assets | | | 1,447.5 | | | | 1,345.3 | |
| | | | | | | | |
| | |
Property, Plant and Equipment: | | | | | | | | |
Generation | | | 7,536.9 | | | | 7,469.4 | |
Transmission | | | 1,403.9 | | | | 1,313.2 | |
Distribution | | | 3,856.6 | | | | 3,784.4 | |
Other | | | 444.4 | | | | 440.7 | |
Accumulated depreciation | | | (5,232.6 | ) | | | (5,104.9 | ) |
| | | | | | | | |
Subtotal | | | 8,009.2 | | | | 7,902.8 | |
Construction work in progress | | | 982.7 | | | | 800.6 | |
Property, plant and equipment held for sale, net | | | — | | | | 253.7 | |
| | | | | | | | |
Total property, plant and equipment, net | | | 8,991.9 | | | | 8,957.1 | |
| | | | | | | | |
| | |
Other Noncurrent Assets: | | | | | | | | |
Regulatory assets | | | 736.0 | | | | 717.3 | |
Goodwill | | | 367.3 | | | | 367.3 | |
Restricted funds | | | 36.0 | | | | 60.2 | |
Investments in unconsolidated affiliates | | | 44.8 | | | | 26.7 | |
Derivative assets | | | 4.0 | | | | — | |
Other | | | 103.4 | | | | 115.2 | |
| | | | | | | | |
Total other noncurrent assets | | | 1,291.5 | | | | 1,286.7 | |
| | | | | | | | |
Total Assets | | $ | 11,730.9 | | | $ | 11,589.1 | |
| | | | | | | | |
7
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(unaudited)
| | | | | | | | |
(In millions, except share amounts) | | June 30,
2010 | | | December 31,
2009 | |
LIABILITIES AND EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Long-term debt due within one year | | $ | 165.6 | | | $ | 140.8 | |
Accounts payable | | | 357.8 | | | | 411.4 | |
Accrued taxes | | | 66.1 | | | | 87.3 | |
Payable to PJM for FTRs | | | 2.0 | | | | 31.7 | |
Derivative liabilities | | | 7.6 | | | | 24.4 | |
Regulatory liabilities | | | 18.8 | | | | 37.4 | |
Accrued interest | | | 73.6 | | | | 68.3 | |
Security deposits | | | 53.1 | | | | 51.0 | |
Liabilities associated with assets held for sale | | | — | | | | 10.1 | |
Deferred income taxes | | | 8.5 | | | | — | |
Other | | | 108.1 | | | | 123.2 | |
| | | | | | | | |
Total current liabilities | | | 861.2 | | | | 985.6 | |
| | | | | | | | |
Long-term Debt | | | 4,463.2 | | | | 4,417.0 | |
| | |
Deferred Credits and Other Liabilities: | | | | | | | | |
Derivative liabilities | | | 5.6 | | | | 6.7 | |
Income taxes payable | | | 116.5 | | | | 85.7 | |
Investment tax credit | | | 60.1 | | | | 61.6 | |
Deferred income taxes | | | 1,509.4 | | | | 1,501.3 | |
Regulatory liabilities | | | 470.3 | | | | 461.2 | |
Pension and other postretirement employee benefit plan liabilities | | | 627.5 | | | | 597.4 | |
Adverse power purchase commitment | | | 105.4 | | | | 114.4 | |
Liabilities associated with assets held for sale | | | — | | | | 53.1 | |
Other | | | 205.8 | | | | 177.0 | |
| | | | | | | | |
Total deferred credits and other liabilities | | | 3,100.6 | | | | 3,058.4 | |
| | | | | | | | |
| | |
Equity: | | | | | | | | |
Common stock - $1.25 par value per share, 260,000,000 shares authorized and 169,666,019 and 169,620,917 shares issued at June 30, 2010 and December 31, 2009, respectively | | | 212.1 | | | | 212.0 | |
Other paid-in capital | | | 1,979.6 | | | | 1,970.2 | |
Retained earnings | | | 1,180.2 | | | | 1,022.7 | |
Treasury stock at cost - 51,313 shares at June 30, 2010 and December 31, 2009, respectively | | | (1.8 | ) | | | (1.8 | ) |
Accumulated other comprehensive loss | | | (64.2 | ) | | | (89.9 | ) |
| | | | | | | | |
Total Allegheny Energy, Inc. common stockholders’ equity | | | 3,305.9 | | | | 3,113.2 | |
Noncontrolling interest | | | — | | | | 14.9 | |
| | | | | | | | |
Total equity | | | 3,305.9 | | | | 3,128.1 | |
| | | | | | | | |
| | |
Total Liabilities and Equity | | $ | 11,730.9 | | | $ | 11,589.1 | |
| | | | | | | | |
8
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
SEGMENT STATEMENTS OF INCOME
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, 2010 | | | Three Months Ended
June 30, 2009 | |
(In millions) | | Merchant
Generation | | | Regulated
Operations | | | Eliminations
(a) | | | Total | | | Merchant
Generation | | | Regulated
Operations | | | Eliminations
(a) | | | Total | |
Operating revenues | | $ | 457.9 | | | $ | 795.3 | | | $ | (307.5 | ) | | $ | 945.7 | | | $ | 374.2 | | | $ | 722.4 | | | $ | (281.9 | ) | | $ | 814.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fuel | | | 230.1 | | | | 65.6 | | | | — | | | | 295.7 | | | | 153.6 | | | | 63.2 | | | | — | | | | 216.8 | |
Purchased power and transmission | | | 9.2 | | | | 423.3 | | | | (306.2 | ) | | | 126.3 | | | | 8.8 | | | | 383.9 | | | | (280.5 | ) | | | 112.2 | |
Deferred energy costs, net | | | — | | | | 2.3 | | | | — | | | | 2.3 | | | | — | | | | (7.6 | ) | | | — | | | | (7.6 | ) |
Gain on sale of Virginia distribution business | | | — | | | | (45.1 | ) | | | — | | | | (45.1 | ) | | | — | | | | — | | | | — | | | | — | |
Operations and maintenance | | | 52.5 | | | | 107.4 | | | | (1.3 | ) | | | 158.6 | | | | 88.7 | | | | 113.2 | | | | (1.4 | ) | | | 200.5 | |
Depreciation and amortization | | | 32.4 | | | | 48.6 | | | | (0.4 | ) | | | 80.6 | | | | 24.0 | | | | 43.7 | | | | (0.5 | ) | | | 67.2 | |
Taxes other than income taxes | | | 12.9 | | | | 43.7 | | | | — | | | | 56.6 | | | | 8.5 | | | | 38.0 | | | | — | | | | 46.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 337.1 | | | | 645.8 | | | | (307.9 | ) | | | 675.0 | | | | 283.6 | | | | 634.4 | | | | (282.4 | ) | | | 635.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 120.8 | | | | 149.5 | | | | 0.4 | | | | 270.7 | | | | 90.6 | | | | 88.0 | | | | 0.5 | | | | 179.1 | |
Other income (expense), net | | | 0.8 | | | | 5.4 | | | | (3.3 | ) | | | 2.9 | | | | 0.4 | | | | 4.2 | | | | (2.8 | ) | | | 1.8 | |
Interest expense | | | 36.4 | | | | 44.1 | | | | (0.9 | ) | | | 79.6 | | | | 20.0 | | | | 39.3 | | | | (0.2 | ) | | | 59.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 85.2 | | | | 110.8 | | | | (2.0 | ) | | | 194.0 | | | | 71.0 | | | | 52.9 | | | | (2.1 | ) | | | 121.8 | |
Income tax expense | | | 30.0 | | | | 43.8 | | | | — | | | | 73.8 | | | | 26.8 | | | | 22.1 | | | | — | | | | 48.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 55.2 | | | | 67.0 | | | | (2.0 | ) | | | 120.2 | | | | 44.2 | | | | 30.8 | | | | (2.1 | ) | | | 72.9 | |
Net income attributable to noncontrolling interest | | | (2.2 | ) | | | — | | | | 2.2 | | | | — | | | | (2.3 | ) | | | (0.3 | ) | | | 2.3 | | | | (0.3 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. | | $ | 53.0 | | | $ | 67.0 | | | $ | 0.2 | | | $ | 120.2 | | | $ | 41.9 | | | $ | 30.5 | | | $ | 0.2 | | | $ | 72.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Represents elimination of transactions between reportable segments. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
June 30, 2010 | | | Six Months Ended
June 30, 2009 | |
(In millions) | | Merchant
Generation | | | Regulated
Operations | | | Eliminations
(a) | | | Total | | | Merchant
Generation | | | Regulated
Operations | | | Eliminations
(a) | | | Total | |
Operating revenues | | $ | 920.5 | | | $ | 1,756.3 | | | $ | (682.3 | ) | | $ | 1,994.5 | | | $ | 829.7 | | | $ | 1,580.4 | | | $ | (638.2 | ) | | $ | 1,771.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fuel | | | 464.6 | | | | 149.1 | | | | — | | | | 613.7 | | | | 338.9 | | | | 136.8 | | | | — | | | | 475.7 | |
Purchased power and transmission | | | 18.8 | | | | 935.9 | | | | (679.5 | ) | | | 275.2 | | | | 18.2 | | | | 863.3 | | | | (635.4 | ) | | | 246.1 | |
Deferred energy costs, net | | | — | | | | 10.4 | | | | — | | | | 10.4 | | | | — | | | | (24.6 | ) | | | — | | | | (24.6 | ) |
Gain on sale of Virginia distribution business | | | — | | | | (45.1 | ) | | | — | | | | (45.1 | ) | | | — | | | | — | | | | — | | | | — | |
Operations and maintenance | | | 118.5 | | | | 261.4 | | | | (2.8 | ) | | | 377.1 | | | | 150.8 | | | | 219.8 | | | | (2.8 | ) | | | 367.8 | |
Depreciation and amortization | | | 64.5 | | | | 96.7 | | | | (0.8 | ) | | | 160.4 | | | | 47.7 | | | | 88.9 | | | | (0.9 | ) | | | 135.7 | |
Taxes other than income taxes | | | 26.1 | | | | 87.6 | | | | — | | | | 113.7 | | | | 21.3 | | | | 81.0 | | | | — | | | | 102.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total operating expenses | | | 692.5 | | | | 1,496.0 | | | | (683.1 | ) | | | 1,505.4 | | | | 576.9 | | | | 1,365.2 | | | | (639.1 | ) | | | 1,303.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income | | | 228.0 | | | | 260.3 | | | | 0.8 | | | | 489.1 | | | | 252.8 | | | | 215.2 | | | | 0.9 | | | | 468.9 | |
Other income (expense), net | | | 1.4 | | | | 10.5 | | | | (6.6 | ) | | | 5.3 | | | | 1.0 | | | | 8.7 | | | | (5.5 | ) | | | 4.2 | |
Interest expense | | | 72.5 | | | | 85.6 | | | | (1.7 | ) | | | 156.4 | | | | 37.8 | | | | 78.9 | | | | (0.4 | ) | | | 116.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 156.9 | | | | 185.2 | | | | (4.1 | ) | | | 338.0 | | | | 216.0 | | | | 145.0 | | | | (4.2 | ) | | | 356.8 | |
Income tax expense | | | 57.0 | | | | 72.6 | | | | — | | | | 129.6 | | | | 89.6 | | | | 60.2 | | | | — | | | | 149.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | 99.9 | | | | 112.6 | | | | (4.1 | ) | | | 208.4 | | | | 126.4 | | | | 84.8 | | | | (4.2 | ) | | | 207.0 | |
Net income attributable to noncontrolling interest | | | (4.5 | ) | | | — | | | | 4.5 | | | | — | | | | (4.6 | ) | | | (0.5 | ) | | | 4.6 | | | | (0.5 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. | | $ | 95.4 | | | $ | 112.6 | | | $ | 0.4 | | | $ | 208.4 | | | $ | 121.8 | | | $ | 84.3 | | | $ | 0.4 | | | $ | 206.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Represents elimination of transactions between reportable segments. |
9
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE THREE MONTHS ENDED JUNE 30, 2010 AND 2009
(in millions, except per share data)
(unaudited)
| | | | | | | | | | | |
THREE MONTHS ENDED JUNE 30, 2010 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | DILUTED
EARNINGS
PER
SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | | | |
Income - GAAP Basis | | $ | 194.0 | | | $ | 120.2 | | | $ | 0.71 |
| | | | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | | | |
Net unrealized loss associated with economic hedges1 | | | 3.4 | | | | 2.1 | | | | |
Expense associated with the planned merger2 | | | 4.3 | | | | 2.6 | | | | |
Gain on sale of Virginia distribution business3 | | | (45.1 | ) | | | (28.0 | ) | | | |
| | | | | | | | | | | |
Adjusted Income | | $ | 156.6 | | | $ | 96.9 | | | $ | 0.57 |
| | | | | | | | | | | |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | |
Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 120.2 | | | | |
Interest expense | | | | | | | 79.6 | | | | |
Income tax expense | | | | | | | 73.8 | | | | |
Depreciation and amortization | | | | | | | 80.6 | | | | |
| | | | | | | | | | | |
EBITDA | | | | | | | 354.2 | | | | |
Net unrealized loss associated with economic hedges1 | | | | | | | 3.4 | | | | |
Expense associated with the planned merger2 | | | | | | | 4.3 | | | | |
Gain on sale of Virginia distribution business3 | | | | | | | (45.1 | ) | | | |
| | | | | | | | | | | |
Adjusted EBITDA | | | | | | $ | 316.8 | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
THREE MONTHS ENDED JUNE 30, 2009 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | DILUTED
EARNINGS
PER
SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | | | |
Income - GAAP Basis | | $ | 121.8 | | | $ | 72.6 | | | $ | 0.43 |
| | | | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | | | |
Net unrealized gain associated with economic hedges1 | | | (4.6 | ) | | | (2.8 | ) | | | |
| | | | | | | | | | | |
Adjusted Income | | $ | 117.2 | | | $ | 69.8 | | | $ | 0.41 |
| | | | | | | | | | | |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | |
Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 72.6 | | | | |
Interest expense | | | | | | | 59.1 | | | | |
Income tax expense | | | | | | | 48.9 | | | | |
Depreciation and amortization | | | | | | | 67.2 | | | | |
| | | | | | | | | | | |
EBITDA | | | | | | | 247.8 | | | | |
Net unrealized gain associated with economic hedges1 | | | | | | | (4.6 | ) | | | |
| | | | | | | | | | | |
Adjusted EBITDA | | | | | | $ | 243.2 | | | | |
| | | | | | | | | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
10
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE THREE MONTHS ENDED JUNE 30, 2010 AND 2009
(in millions)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | MERCHANT GENERATION | | | REGULATED OPERATIONS | |
THREE MONTHS ENDED JUNE 30, 2010 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 85.2 | | | $ | 53.0 | | | $ | 110.8 | | | $ | 67.0 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Net unrealized loss associated with economic hedges1 | | | 3.4 | | | | 2.1 | | | | — | | | | — | |
Expense associated with the planned merger2 | | | 2.8 | | | | 1.8 | | | | 1.4 | | | | 0.8 | |
Gain on sale of Virginia distribution business3 | | | — | | | | — | | | | (45.1 | ) | | | (28.0 | ) |
| | | | | | | | | | | | | | | | |
Adjusted Income | | $ | 91.4 | | | $ | 56.9 | | | $ | 67.2 | | | $ | 39.8 | |
| | | | | | | | | | | | | | | | |
| | | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 53.0 | | | | | | | $ | 67.0 | |
Interest expense | | | | | | | 36.4 | | | | | | | | 44.1 | |
Income tax expense | | | | | | | 30.0 | | | | | | | | 43.8 | |
Depreciation and amortization | | | | | | | 32.4 | | | | | | | | 48.6 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | | | | | 151.8 | | | | | | | | 203.5 | |
Net unrealized loss associated with economic hedges1 | | | | | | | 3.4 | | | | | | | | — | |
Expense associated with the planned merger2 | | | | | | | 2.8 | | | | | | | | 1.4 | |
Gain on sale of Virginia distribution business3 | | | | | | | — | | | | | | | | (45.1 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | | | | | $ | 158.0 | | | | | | | $ | 159.8 | |
| | | | | | | | | | | | | | | | |
| | |
| | | MERCHANT GENERATION | | | REGULATED OPERATIONS | |
THREE MONTHS ENDED JUNE 30, 2009 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 71.0 | | | $ | 41.9 | | | $ | 52.9 | | | $ | 30.5 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Net unrealized gain associated with economic hedges1 | | | (4.6 | ) | | | (2.8 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted Income | | $ | 66.4 | | | $ | 39.1 | | | $ | 52.9 | | | $ | 30.5 | |
| | | | | | | | | | | | | | | | |
| | | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. - GAAP basis | | | $ | 41.9 | | | | | | | $ | 30.5 | |
Interest expense | | | | 20.0 | | | | | | | | 39.3 | |
Income tax expense | | | | 26.8 | | | | | | | | 22.1 | |
Depreciation and amortization | | | | 24.0 | | | | | | | | 43.7 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | | 112.7 | | | | | | | | 135.6 | |
Net unrealized gain associated with economic hedges1 | | | | (4.6 | ) | | | | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | | $ | 108.1 | | | | | | | $ | 135.6 | |
| | | | | | | | | | | | | | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
11
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(in millions, except per share data)
(unaudited)
| | | | | | | | | | | |
SIX MONTHS ENDED JUNE 30, 2010 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | DILUTED
EARNINGS
PER
SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | | | |
Income - GAAP Basis | | $ | 338.0 | | | $ | 208.4 | | | $ | 1.23 |
| | | | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | | | |
Net unrealized loss associated with economic hedges1 | | | 14.2 | | | | 8.7 | | | | |
Expense associated with the planned merger2 | | | 17.6 | | | | 10.7 | | | | |
Gain on sale of Virginia distribution business3 | | | (45.1 | ) | | | (28.0 | ) | | | |
| | | | | | | | | | | |
Adjusted Income | | $ | 324.7 | | | $ | 199.8 | | | $ | 1.17 |
| | | | | | | | | | | |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | |
Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 208.4 | | | | |
Interest expense | | | | | | | 156.4 | | | | |
Income tax expense | | | | | | | 129.6 | | | | |
Depreciation and amortization | | | | | | | 160.4 | | | | |
| | | | | | | | | | | |
EBITDA | | | | | | | 654.8 | | | | |
Net unrealized loss associated with economic hedges1 | | | | | | | 14.2 | | | | |
Expense associated with the planned merger2 | | | | | | | 17.6 | | | | |
Gain on sale of Virginia distribution business3 | | | | | | | (45.1 | ) | | | |
| | | | | | | | | | | |
Adjusted EBITDA | | | | | | $ | 641.5 | | | | |
| | | | | | | | | | | |
| | | |
SIX MONTHS ENDED JUNE 30, 2009 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | DILUTED
EARNINGS
PER
SHARE |
| | | |
Calculation of Adjusted Income: | | | | | | | | | | | |
Income - GAAP Basis | | $ | 356.8 | | | $ | 206.5 | | | $ | 1.22 |
| | | | | | | | | | | |
| | | |
Adjustments: | | | | | | | | | | | |
Net unrealized gain associated with economic hedges1 | | | (37.0 | ) | | | (22.6 | ) | | | |
| | | | | | | | | | | |
Adjusted Income | | $ | 319.8 | | | $ | 183.9 | | | $ | 1.08 |
| | | | | | | | | | | |
| | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | |
Net Income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 206.5 | | | | |
Interest expense | | | | | | | 116.3 | | | | |
Income tax expense | | | | | | | 149.8 | | | | |
Depreciation and amortization | | | | | | | 135.7 | | | | |
| | | | | | | | | | | |
EBITDA | | | | | | | 608.3 | | | | |
Net unrealized gain associated with economic hedges1 | | | | | | | (37.0 | ) | | | |
| | | | | | | | | | | |
Adjusted EBITDA | | | | | | $ | 571.3 | | | | |
| | | | | | | | | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
12
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(in millions)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | MERCHANT GENERATION | | | REGULATED OPERATIONS | |
| | | | |
SIX MONTHS ENDED JUNE 30, 2010 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 156.9 | | | $ | 95.4 | | | $ | 185.2 | | | $ | 112.6 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Net unrealized loss associated with economic hedges1 | | | 14.2 | | | | 8.7 | | | | — | | | | — | |
Expense associated with the planned merger2 | | | 6.0 | | | | 3.7 | | | | 11.6 | | | | 7.1 | |
Gain on sale of Virginia distribution business3 | | | — | | | | — | | | | (45.1 | ) | | | (28.0 | ) |
| | | | | | | | | | | | | | | | |
Adjusted Income | | $ | 177.1 | | | $ | 107.8 | | | $ | 151.7 | | | $ | 91.7 | |
| | | | | | | | | | | | | | | | |
| | | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. - GAAP basis | | | | | | $ | 95.4 | | | | | | | $ | 112.6 | |
Interest expense | | | | | | | 72.5 | | | | | | | | 85.6 | |
Income tax expense | | | | | | | 57.0 | | | | | | | | 72.6 | |
Depreciation and amortization | | | | | | | 64.5 | | | | | | | | 96.7 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | | | | | 289.4 | | | | | | | | 367.5 | |
Net unrealized loss associated with economic hedges1 | | | | | | | 14.2 | | | | | | | | — | |
Expense associated with the planned merger2 | | | | | | | 6.0 | | | | | | | | 11.6 | |
Gain on sale of Virginia distribution business3 | | | | | | | — | | | | | | | | (45.1 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | | | | | $ | 309.6 | | | | | | | $ | 334.0 | |
| | | | | | | | | | | | | | | | |
| | |
| | | MERCHANT GENERATION | | | REGULATED OPERATIONS | |
| | | | |
SIX MONTHS ENDED JUNE 30, 2009 | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | | | INCOME
BEFORE
INCOME
TAXES | | | NET INCOME
ATTRIBUTABLE
TO
ALLEGHENY
ENERGY, INC. | |
| | | | |
Calculation of Adjusted Income: | | | | | | | | | | | | | | | | |
Income - GAAP Basis | | $ | 216.0 | | | $ | 121.8 | | | $ | 145.0 | | | $ | 84.3 | |
| | | | |
Adjustments: | | | | | | | | | | | | | | | | |
Net unrealized gain associated with economic hedges1 | | | (37.0 | ) | | | (22.6 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted Income | | $ | 179.0 | | | $ | 99.2 | | | $ | 145.0 | | | $ | 84.3 | |
| | | | | | | | | | | | | | | | |
| | | | |
Calculation of Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Net income attributable to Allegheny Energy, Inc. - GAAP basis | | | $ | 121.8 | | | | | | | $ | 84.3 | |
Interest expense | | | | 37.8 | | | | | | | | 78.9 | |
Income tax expense | | | | 89.6 | | | | | | | | 60.2 | |
Depreciation and amortization | | | | 47.7 | | | | | | | | 88.9 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | | 296.9 | | | | | | | | 312.3 | |
Net unrealized gain associated with economic hedges1 | | | | (37.0 | ) | | | | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | | $ | 259.9 | | | | | | | $ | 312.3 | |
| | | | | | | | | | | | | | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
13
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SUMMARY OF ADJUSTMENTS
(in millions)
(unaudited)
| | | | | | | | |
ADJUSTED OPERATING REVENUE | | THREE MONTHS ENDED
JUN 30, 2010 | | | THREE MONTHS ENDED
JUN 30, 2009 | |
| | |
Operating revenue: | | | | | | | | |
As reported | | $ | 945.7 | | | $ | 814.7 | |
| | |
Net unrealized (gain)/loss associated with economic hedges1 | | | 3.4 | | | | (4.6 | ) |
| | | | | | | | |
As Adjusted | | $ | 949.1 | | | $ | 810.1 | |
| | | | | | | | |
| | |
ADJUSTED OPERATIONS AND MAINTENANCE EXPENSE | | THREE MONTHS ENDED
JUN 30, 2010 | | | THREE MONTHS ENDED
JUN 30, 2009 | |
| | |
Operations and maintenance expense: | | | | | | | | |
As reported | | $ | 158.6 | | | $ | 200.5 | |
| | |
Expense associated with the planned merger2 | | | (4.3 | ) | | | — | |
| | | | | | | | |
As Adjusted | | $ | 154.3 | | | $ | 200.5 | |
| | | | | | | | |
| | |
ADJUSTED GAIN ON SALE OF THE VIRGINIA DISTRIBUTION BUSINESS | | THREE MONTHS ENDED
JUN 30, 2010 | | | THREE MONTHS ENDED
JUN 30, 2009 | |
| | |
Gain on sale of Virginia distribution business: | | | | | | | | |
As reported | | ($ | 45.1 | ) | | | — | |
| | |
Gain on sale of Virginia distribution business3 | | | (45.1 | ) | | | — | |
| | | | | | | | |
As Adjusted | | | — | | | | — | |
| | | | | | | | |
| | |
ADJUSTED INCOME TAX EXPENSE | | THREE MONTHS ENDED
JUN 30, 2010 | | | THREE MONTHS ENDED
JUN 30, 2009 | |
| | |
Income taxes: | | | | | | | | |
As reported | | $ | 73.8 | | | $ | 48.9 | |
| | |
Income taxes related to net unrealized gain/(losses) associated with economic hedges1 | | | 1.3 | | | | (1.8 | ) |
Income taxes related to expense associated with the planned merger2 | | | 1.7 | | | | — | |
Income taxes related to gain on sale of Virginia distribution business3 | | | (17.1 | ) | | | — | |
| | | | | | | | |
As Adjusted | | $ | 59.7 | | | $ | 47.1 | |
| | | | | | | | |
See accompanying Notes to Reconciliation of Non-GAAP Financial Measures
14
Notes to Reconciliation of Non-GAAP Financial Measures:
| (1) | Adjustments relating to certain unrealized gains/ (losses) included in GAAP operating revenues: |
| | | | | | | | |
| | | THREE MONTHS ENDED
JUN 30, 2010 | | | THREE MONTHS ENDED
JUN 30, 2009 | |
Financial transmission rights | | $ | 15.0 | | | $ | 6.3 | |
Power hedges | | | (8.3 | ) | | | 0.7 | |
Hedging strategy relating to a natural gas transportation contract | | | (10.1 | ) | | | (2.4 | ) |
| | | | | | | | |
Total adjustments | | ($ | 3.4 | ) | | $ | 4.6 | |
| | | | | | | | |
| | |
| | | SIX MONTHS ENDED
JUN 30, 2010 | | | SIX MONTHS ENDED
JUN 30, 2009 | |
Financial transmission rights | | $ | 15.0 | | | $ | 27.5 | |
Power hedges | | | (13.3 | ) | | | (8.5 | ) |
Hedging strategy relating to a natural gas transportation contract | | | (15.9 | ) | | | 18.0 | |
| | | | | | | | |
Total adjustments | | ($ | 14.2 | ) | | $ | 37.0 | |
| | | | | | | | |
| (2) | In February, 2010, Allegheny Energy, Inc. and FirstEnergy Corp. entered into an Agreement and Plan of Merger. Incremental merger costs were included in operations and maintenance expense on the Consolidated Statements of Income. |
| (3) | On June 1, 2010, Potomac Edison sold its electric distribution operations in Virginia (the “Virginia distribution business”) to Rappahannock Electric Cooperative and Shenandoah Valley Electric Cooperative, resulting in a pre-tax gain of approximately $45.1 million. The gain on sale is presented as “Gain on sale of Virginia distribution business” on the Consolidated Statements of Income. |
15
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Three Months Ended June 30,
| | | | | | | | | | | | | | | | |
| | | Actual
2010 | | | Actual
2009 | | | | | | Excluding Virginia Operations* | |
| | | | | Change | | | 2010 | | 2009 | | Change | |
REGULATED OPERATIONS | | | | | | | | | | | | | | | | |
Retail electricity sales (thousand MWh): | | | | | | | | | | | | | | | | |
Residential | | 3,499 | | | 3,529 | | | -0.9 | % | | 3,323 | | 3,263 | | 1.8 | % |
Commercial | | 2,664 | | | 2,772 | | | -3.9 | % | | 2,549 | | 2,586 | | -1.4 | % |
Industrial and other | | 3,659 | | | 3,423 | | | 6.9 | % | | 3,497 | | 3,203 | | 9.2 | % |
Total | | 9,822 | | | 9,724 | | | 1.0 | % | | 9,369 | | 9,052 | | 3.5 | % |
Usage per customer (KWh): | | | | | | | | | | | | | | | | |
Residential | | 2,620 | | | 2,583 | | | 1.4 | % | | 2,586 | | 2,548 | | 1.5 | % |
Commercial | | 14,704 | | | 14,909 | | | -1.4 | % | | 14,794 | | 15,105 | | -2.1 | % |
Industrial | | 135,779 | | | 124,892 | | | 8.7 | % | | 134,434 | | 123,898 | | 8.5 | % |
Regulated generation (thousand MWh): | | | | | | | | | | | | | | | | |
Supercritical coal | | 2,039 | | | 2,025 | | | 0.7 | % | | | | | | | |
Other coal | | 60 | | | 65 | | | -7.7 | % | | | | | | | |
Hydro and other | | 168 | | | 135 | | | 24.4 | % | | | | | | | |
Total | | 2,267 | | | 2,225 | | | 1.9 | % | | | | | | | |
| | | | | | |
MERCHANT GENERATION | | | | | | | | | | | | | | | | |
Generation (thousand MWh): | | | | | | | | | | | | | | | | |
Supercritical coal | | 7,317 | | | 5,492 | | | 33.2 | % | | | | | | | |
Other coal | | 676 | | | 149 | | | 353.7 | % | | | | | | | |
Gas | | 190 | | | 93 | | | 104.3 | % | | | | | | | |
Hydro and other | | 391 | | | 343 | | | 14.0 | % | | | | | | | |
Total | | 8,575 | | | 6,078 | | | 41.1 | % | | | | | | | |
Net capacity factor: | | | | | | | | | | | | | | | | |
Supercritical coal | | 76 | % | | 57 | % | | 19.0 | % | | | | | | | |
All coal | | 71 | % | | 50 | % | | 21.0 | % | | | | | | | |
Equivalent availability factor: | | | | | | | | | | | | | | | | |
Supercritical coal | | 88 | % | | 70 | % | | 18.0 | % | | | | | | | |
All coal | | 88 | % | | 72 | % | | 16.0 | % | | | | | | | |
| | | | | | |
DEGREE DAYS | | | | | | | | | | | | | | | | |
Heating | | 381 | | | 529 | | | -28.0 | % | | | | | | | |
Cooling | | 384 | | | 262 | | | 46.6 | % | | | | | | | |
| * | Represents actual results for both 2010 and 2009 excluding amounts relating to the Virginia distribution operations that were sold on June 1, 2010. |
16
ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Six Months Ended June 30,
| | | | | | | | | | | | | | | | | |
| | | Actual
2010 | | Actual
2009 | | | | | | Excluding Virginia Operations* | |
| | | | | Change | | | 2010 | | 2009 | | Change | |
REGULATED OPERATIONS | | | | | | | | | | | | | | | |
Retail electricity sales (thousand MWh): | | | | | | | | | | | | | | | | | |
Residential | | 8,756 | | 8,772 | | | -0.2 | % | | 8,165 | | 8,086 | | 1.0 | % |
Commercial | | 5,487 | | 5,547 | | | -1.1 | % | | 5,186 | | 5,178 | | 0.2 | % |
Industrial and other | | 7,379 | | 6,936 | | | 6.4 | % | | 6,991 | | 6,508 | | 7.4 | % |
Total | | 21,622 | | 21,255 | | | 1.7 | % | | 20,342 | | 19,772 | | 2.9 | % |
Usage per customer (KWh): | | | | | | | | | | | | | | | | | |
Residential | | 6,469 | | 6,420 | | | 0.8 | % | | 6,354 | | 6,315 | | 0.6 | % |
Commercial | | 29,811 | | 29,860 | | | -0.2 | % | | 30,110 | | 30,259 | | -0.5 | % |
Industrial | | 270,728 | | 253,259 | | | 6.9 | % | | 268,970 | | 251,992 | | 6.7 | % |
Regulated generation (thousand MWh): | | | | | | | | | | | | | | | | | |
Supercritical coal | | 4,517 | | 4,497 | | | 0.4 | % | | | | | | | |
Other coal | | 283 | | 212 | | | 33.5 | % | | | | | | | |
Hydro and other | | 288 | | 235 | | | 22.6 | % | | | | | | | |
Total | | 5,088 | | 4,944 | | | 2.9 | % | | | | | | | |
| | | | | | |
MERCHANT GENERATION | | | | | | | | | | | | | | | |
Generation (thousand MWh): | | | | | | | | | | | | | | | |
Supercritical coal | | 14,475 | | 11,943 | | | 21.2 | % | | | | | | | |
Other coal | | 1,491 | | 720 | | | 107.1 | % | | | | | | | |
Gas | | 280 | | 176 | | | 59.1 | % | | | | | | | |
Hydro and other | | 737 | | 626 | | | 17.7 | % | | | | | | | |
Total | | 16,983 | | 13,465 | | | 26.1 | % | | | | | | | |
Net capacity factor: | | | | | | | | | | | | | | | |
Supercritical coal | | 75% | | 62 | % | | 13.0 | % | | | | | | | |
All coal | | 71% | | 56 | % | | 15.0 | % | | | | | | | |
Equivalent availability factor: | | | | | | | | | | | | | | | |
Supercritical coal | | 85% | | 75 | % | | 10.0 | % | | | | | | | |
All coal | | 86% | | 76 | % | | 10.0 | % | | | | | | | |
| | | | | | |
DEGREE DAYS | | | | | | | | | | | | | | | |
Heating | | 3,147 | | 3,289 | | | -4.3 | % | | | | | | | |
Cooling | | 384 | | 264 | | | 45.5 | % | | | | | | | |
| * | Represents actual results for both 2010 and 2009 excluding amounts relating to the Virginia distribution operations that were sold on June 1, 2010. |
17
